Chevron/Rosneft Rumors Continue To Swirl

Rumors regarding the possible departure of Chevron, the second-largest U.S. oil company, from a $32 billion venture with OAO Rosneft, Russia's largest oil producer, in the Black Sea continue to swirl and sources at both companies are saying the firms are mulling whether or not to even move forward with the project.

Last week, OilSlick noted that Chevron (CVX) was considering withdrawing from the project over concerns that it may not yield enough oil to make it profitable. Also at issue has been Rosneft's demands that the project be domiciled in Russia and inability of the two sides to agree on where any arbitration proceedings that may arise be held.

The project, known as Val Shatskogo, was the biggest energy deal in Russia involving a foreign energy major in 2010, according to Reuters. If Chevron does in fact withdraw from the project, it would be a major blow for Rosneft, which has been seeking to work with Western oil majors to increase output of Russian crude.

Last week, an arbitration tribunal extended an injunction blocking Rosneft's $16 billion share swap with BP (BP), Europe's second-largest oil company. Analysts are speculating that news may have given Russia a black eye and Russian oil companies may find it difficult to partner with their Western rivals in the near-term as a result.